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SEC issues FAQs on Form ADV Amendments; clarifies disclosure of social media websites

On June 12, 2017, the SEC issued a set of 23 Frequently Asked Questions (FAQs) pertaining to the changes to Form ADV Part 1A that will be implemented on October 1, 2017.

Starting on that date the changes will apply to initial FORM ADV filings and other-than-annual amendments by investment advisers and, if none, to their annual updating amendments filed in the first quarter of 2018.
One of the more significant topics covered by the SEC in the new FAQs for most advisors is the extent to which investment advisors must report their presence on social media websites in response to Form ADV Part 1A Item 1.I.

In the FAQs, the SEC clarified that an adviser does not have to provide the address of websites or accounts on publicly available social media platforms where the adviser does not control the content. In addition, an adviser does not have to report the address of an account on a publicly available social media platform where an unaffiliated third party distributor or solicitor controls the content. However, to the extent an account is used to promote the business of an adviser registered with the commission and the adviser controls the content, the account should be reported.

Whether an adviser controls the content of such an account depends on the facts and circumstances. For example, the SEC staff believes if the adviser provides content for the account and is aware its parent company uses the account to promote the adviser’s business, then the adviser may be in control of the content and therefore would have to report the account’s address. On the other hand, if such an account merely mentions the adviser as one of the parent company’s subsidiaries, but is not used to promote the adviser’s business, then the adviser may not be in control of the content and therefore could omit reporting the account’s address.

In contrast, an investment adviser is not required to report the address of an employee’s account on a publicly available social media platform even if the adviser controls the content of the account. The SEC staff explained Item 1.I is not intended to extend to the social media accounts of an adviser’s employees regardless of whether the adviser controls the content of such accounts.